With no congressional solution to the nation’s sudden high cost of insurance in sight, ratings agencies are placing high-profile and single-asset loans on watch lists while they review each building’s terrorism coverage.

At the same time, retail and hotel woes have caused individual loans in pools around the country to default – though a new report from Salomon Smith Barney shows that trend letting up as owners find ways to hang onto properties while the economy improves.

The cost of terrorism insurance has increased so much that it is now a major expense that will affect buildings’ bottom lines. That means there will be less money available to pay off debt. And if the ratings agencies downgrade the bonds, it means they will be worth less to the institutional pension funds that must eventually pay off pensioners.

In some cases the cost of insurance will start to hit the books of business tenants as they receive escalation bills.

“If another attack occurs, this issue will mushroom beyond belief,” said Mark S. Edelstein, an attorney with Morrison Foerster who has been negotiating with many lenders, servicers and building owners.

The discussions, he said, have involved carving out the value of the land from the needed coverage, limits on how much the building owner will spend toward insurance and letting lenders pick which coverage to buy with the allocated dollars, particularly in future years.

Fitch, meanwhile, is reviewing 13 loans on properties considered at high risk for terrorism. Ten in New York include Kings Plaza in Brooklyn, along with the office towers at One Liberty; 1633 Broadway; 245 Park Ave.; 280 Park Ave.; and five on Avenue of the Americas, including 1166, 1251, 1301, 1345, and The Post’s rented headquarters at 1211 Avenue of the Americas.

Moody’s is also watching some of the same loans – 1211, 1251 and 1345 Avenue of Americas and 280 Park – along with 4 Times Square, which is in a court battle over the extent of its insurance coverage.

At 4 Times Square, loan servicer Cigna has been trying to obtain rents from the building’s owner, the Durst Organization, to pay for separate terrorism coverage. Durst claims it complied with mortgage-loan documents only, requiring it to buy an all-risk policy – which no longer includes terrorism coverage.

Cigna is barred from touching the rents while a judge considers the case.

The economic climate has also hit hotels and retail stores, many of which are in bankruptcy, and malls. Moody’s is considering a downgrade of a DLJ pool because its largest loan, a $60 million mortgage on Ian Schrager’s Clift Hotel in San Francisco, is in special servicing. The loan on the hotel is current, and Schrager said he was unaware of Moody’s action.

Fitch is giving owners until Sept. 30 to work out enough insurance coverage to protect the value of the triple-A bonds – about 60 to 70 percent of the loan’s value.

“For the high-risk properties, we wanted more insurance coverage for acts of terrorism,” said Terry Winograd, senior director of Fitch Ratings.

Winograd said it would be “irresponsible” not to incorporate terrorism risk into research. “We are hoping the government will step in.”

Sen. Hillary Clinton warned the Real Estate Board of New York last week that it should voice concern to congressmen as Washington senses the situation is under control because some insurance has become available.

Some deep-pocketed owners are worried about terrorism insurance but not about their paper being downgraded.

“The owners are taking it seriously but they think there are opportunities to buy back their debt cheap,” said one real estate executive.

Darryl Wheeler director of collateralized mortgage-backed securities research at Salmon Smith Barney, found that contrary to expectations, loan delinquencies declined in May to 1.48 percent, making him believe that real estate might be becoming a leading economic indicator rather than a laggard.

“The fact that delinquencies are declining means that borrowers are having second thoughts on defaulting and seeing potential for properties they may have thought were hopeless back in December,” said Wheeler.

“They have not suffered the financial stresses as they did in the early 90s and have the ability to support properties that may not be cash-flowing. And to extent the economy is recovering, it makes sense to keep them.”

As the stock market continues to tank, real estate owners and investors are also deciding that real estate is still the best place to park their bucks.